The Converting Curmudgeon​

Well, the UK did it. They’ve taken the historic step of voting to leave the European Union…and with all that entails for the next generation. But how might the Brexit affect your package manufacturing and/or web-converting business in the short term?

In a very unscientific Twitter poll I conducted, one third of respondents said the Brexit would have a “very significant” impact on their business. Another third said it would have a “significant” effect, and the remainder was equally divided among “some,” “little” and “none.”

The arguments for leaving the EU fell into three main categories: sovereignty, economics and immigration.

1) Sovereignty: The UK didn’t want to be subject to EU regulations and laws, especially ones that supersede British laws. Many see the EU as being full of unelected officials imposing laws on them from afar. So much for a “United States of Europe.”

2) Economics: The “Leavers” don’t want to bail out or boost up failing European countries (Greece, anyone?). They also don’t want to pay for the EU administration.

3) Immigration: In perhaps the biggest objection to EU membership, Brexit voters didn’t want the incoming freedom of movement anymore. They feel it puts too much of a strain on resources, especially schools and the UK’s National Health Service.

So, now that it’s a done-deal, what’s next for your business?

1) Exchange rates: The British Pound fell more than 10% on Friday to $1.36, and the Euro fell about 2% to $1.11. Basically, your goods and services will be more expensive for UK and EU customers to buy…again in the short term. In my home state of Wisconsin, the UK is the fourth-largest export market for Wisconsin goods ($824 million worth of products shipped from here last year). Higher prices for these goods are bound to have some impact on sales. Check out your own state’s exports to the UK. Conversely, the US dollar, which was already very strong relative to other currencies, only got stronger.

2) Crude oil: Oil prices fell almost 5% on Friday because investors worried that the Brexit will slow down overall, global economic growth. Benchmark US crude dropped to about $47.50 a barrel. While a seriously volatile market, cheaper crude oil can be a good thing for buyers of petroleum-based substrates and other oil-based consumables for coating and printing.

3) Food and pharma: Also on the positive side, much of package manufacturing is for food products, and this can be true of pharmaceuticals as well. These particular markets are not as seriously impacted as more “optional” products – people have to eat, and also unfortunately become ill and need medicine. If your business is in these fields, the Brexit may hit less hard.

Most of the analyses I read over the weekend said it’s going to take time for the real impact of the Brexit to be felt, perhaps three years. But one thing is clear: With countries such as The Netherlands, France, Spain and Denmark thinking about reconsidering their EU membership via referenda as well, the whole EU concept may be up for grabs.

One thing I personally didn’t get: With such a significant thing as voting to leave the EU, why was it only a simple majority? You’d think 60% or a super-majority would have been required? The vote was just 51.9% in favor of leaving. Yes, it’s democracy, but some things require more than just 50% plus one.

The Flexible Packaging Assn.'s (FPA) new infographic is a tool to help converters illustrate the value of flexible packaging to brand owners. Some key points:

Flexible packaging delivers brand impact. According to Packaging World’s survey of brand owners, 97% of brand owners who currently use flexible packaging plan to continue to use the same amount or more in the next five years, and 80% of brand owners agree that packaging influences brand value.

Consumers seek the convenience of flex packs. In a FPA survey conducted by Harris Poll, the top three packaging attributes rated by consumers are: flexible packaging is easy to store; the ability to reseal flexible packages; and flexible packages are easy to open.

Consumers are willing to spend more money for flexible packaging. The Harris Poll also showed that 60% of consumers will pay more for flex-pack attributes that offer easy storability, the ability to reseal, easy opening and extended shelf life.

Flexible packaging creates a smaller environmental footprint. To transport packaging for an equal amount of product, it takes more than 26 truckloads of unfilled glass jars vs. one truckload of unfilled flexible pouches.More info: www.flexpack.org

Should you do your coating in-house, or do you turn to other sources? The folks at DeltaModTech recently posed that question to one of the true gurus of web coating – our own Dr. Edward Cohen — who told them they were actually asking the wrong question. What you really want to ask, Cohen says, is “Where should your coating take place?”